David Faber breaks down the latest details on Paramount Skydance's potential bid for Warner Bros. Discovery.

Paramount Skydance is reportedly considering making an offer to acquire Warner Bros. Discovery, though the timeline for such a move remains uncertain. While initial expectations suggested a near-term bid, updates indicate that negotiations may take longer than anticipated, and no formal offer has been made public. 

If a deal proceeds, it could involve a mix of cash and Paramount stock, with significant financial backing from Larry Ellison and his associates. The potential merger would combine major film studios and streaming platforms, positioning the new entity as a strong competitor to Netflix. However, the structure of the deal, regulatory considerations, and possible interest from other companies such as Netflix, Amazon, or Apple remain unresolved.

Paramount Skydance's potential offer for Warner Bros. Discovery

All right, moving guys from new media to old media. Are you going to FedEx? No, I'm going to Paramount and Warner Brothers Discovery. I wanted to give people a bit of an update here on the story. Obviously, we were talking a lot about a week ago when we first learned of the plan at Paramount to make an offer to buy all of Warner Brothers Discovery. Earlier this week, I'd indicated that while some had believed, and I'd even been led to believe as well, perhaps a said offer would be forthcoming in the near term. It could be a bit longer than the market had anticipated. Warner Brothers stock actually did go down during the course of this week in part on that. So let me give you a bit of an update as we sort of try and get a sense for the timeline. I mean, best I can tell at this point, if you are Paramount, you certainly would love to try to negotiate something with Warner Brothers Discovery. You would do it quietly, wouldn't you? See if you can actually reach a deal instead of making what would be an unsolicited offer. Very much unclear whether they're going to be able to do that. And so we are sort of left wondering and waiting for when, in fact, said offer will be made and then perhaps made public in part to let investors know, put pressure on the company to some extent. Although, as I've indicated previously, there are no true pressure points in the sense of the split of the company doesn't require a vote. There's no annual meeting coming, but obviously you can create pressure to public shareholders and those who would want a deal if that deal comes at a price that they feel is appropriate. So we're going to still wait for that. What would that number look like? This is more the realm of speculation at this point. But what I hear, you know, you could expect perhaps something in the 22 to 24 range, somewhere between 20 and 30 percent of that consideration in stock, in Paramount stock. And it is notable that Paramount Skydance stock has held up extraordinarily well through this period that we first when we first heard about the possibility of an offer. It has performed very well. And in fact, some would argue, well, now they're kind of linked almost. Now, there's a very small float at Paramount Skydance. Remember, 70 percent of it is owned and controlled by Larry Ellison, Fred Bird, his private equity partner, David Ellison, you know, those entities associated with the Ellison family. But it has held up well. And under any deal scenario, let's say it was 70 percent cash, maybe even 80 percent cash. It would be Larry Ellison, is my understanding, providing much of that cash in the form of a payment to Paramount for which he would get stock. So that would be potentially dilutive. Of course, isn't that worth, as we pointed out many times, just what was it last week went up a multiple of what they could pay for all of in one day for all of Warner Brothers Discovery. I'm sure to have all of this on the call. Yeah, so expensive. So I love this construct. But David, is this possible? I'm going to call Bobby. Let me hear it. We all keep saying, well, Disney can't be Netflix. Comcast can't be Netflix because they have too much baggage or carriage. Could this be any chance that they'd be modeling this off of Netflix? Well, I think that would be the hope in the sense of you would have a movie studio that might produce as many as 30 movies a year. You would have what they would argue would be the number two streamer after Netflix. Right. Jumping ahead, perhaps, of Disney. At least that again would be their hope when you combine HBO Max and Paramount Plus. And of course, people also they ask me what would happen to the cable networks? What about that part, the bad part of the company, so to speak? And my understanding is, as is the plan now to split Warner Brothers Discovery, at some point you could see a split off. Now, you also would bring together, to a certain extent, CBS and CNN. You create a lot of cost savings there and bringing the news organizations together. That obviously also has other implications, the likes of which we've discussed earlier in the show. And Larry Ellison, obviously close to the president. It's funny because, you know, on that front as well, antitrust doesn't come up at all. And there was a time, guys, where you could imagine bringing together two studios which would control at least 40 percent of the overall box office, if not more, would have been conceivably an antitrust issue. Now, for perhaps fundamental reasons involving the fact that, well, is there really even a market and people going to see movies as opposed to streaming can really separate it out? It may not be thought of. And then there is, of course, the belief that this would be looked on favorably by the current administration later on for all the reasons that you have some sort of early I don't believe. And obviously we're waiting for a readout from the Trump she call right now. My understanding is that, yes, Oracle would be an investor, as I reported previously. They would continue to use the Oracle cloud infrastructure, but not that Tick-Tock would somehow become a part of. But you don't really need it. The Ellison media. I'm just saying you raise a great point. Why isn't it down? And I'm thinking that people think. People think maybe they've got the cards to really make this into a true Silicon Valley-esque media company. And I buy it, particularly if they can offload what we don't like. Now, speaking of, I mean, Netflix, by the way, is the one name that's still out there is would they ever consider trying to make a bid here for the entire thing? Clearly, there's a belief on the part of Warner Brothers and its board that once the split occurs next year, there might be interest in the studio streaming business from the likes of a Netflix or even an Amazon or maybe even an Apple. But, you know, very much unclear whether Netflix would want to make any move. It would really hurt their stock price. You'd imagine buying a company now with a huge cable presence.

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